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What if there were no mortgages available?
2011 Mar 25, 9:53am 3,730 views 14 comments
by kunal follow (0)
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@MarkinSF - Why can’t people save $100k in today’s currency system? Hasn’t the FDIC limit on savings accounts been raised to $250k recently? If your bank fails, the Fed just prints up the cash!
Of course in today's currency system you can. But our currency system requires somebody to be in debt a dollar for every dollar somebody has. The poster was asking what would happen if there was no debt, and people just paid for homes up front.
Extend the posters question: What if governments had to run balanced budgets and never have any debt?
What if people had to save money to buy everything in cash, and never use a credit card or car loan?
What if nobody was ever in debt?
My point is it would be impossible for almost everybody to save to buy a home if they had to pay up front, and debt based savings (lending to debtors) was not available.
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Just a thought.
What if, no one was willing to give you money to purchase property that you would want to live in?
That if you wanted to live in a place that you called your own, you would save up the money for it. And then buy or build it.
Here are my thoughts: Prices would have to be reduced to the levels of the construction cost + land value of where you intend to live (or even build a house). At that point no one can fool around with the monetary system in place before and after a home is purchased. i.e. no mortgage, no derivative financial instruments.
Is this a step back? a Devolution and hence stupid? or have we evolved so far along as an economy and a monetary system that its just not possible?
#housing